IRS has released the final version of new Form 8971 in response to legislation enacted in 2015, The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015. The form must be used to report the final estate tax value of property distributed or to be distributed from an estate, if the estate filed a Federal estate tax return after July 2015. IRS has also released the final instructions to the form, which, pending the issue of regulations, fill in several details with respect to the new reporting requirements.
If the executor or administrator is unable to make a complete return with respect to any part of the gross estate, they must include in the return all the information available, including a description of such part and the name and address of every person holding a legal or beneficial interest in such part. If they are notified by IRS, such legal or beneficial owners must then file returns as to their parts of the estate.
The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 imposed a new basis consistency standard — in general, the basis of property received by reason of death under Code Sec. 1014 must equal the value of that property for estate tax purposes. This basis consistency rule only applies to a property whose inclusion in the decedent’s estate increases the estate’s federal estate tax liability (reduced by credits allowable against such tax). Each statement required to be furnished must be furnished at such time as IRS may prescribe, but in no case at a time later than the earlier of: (i) the date which is 30 days after the date on which the return under Code Sec. 6018 was required to be filed (including extensions, if any); or (ii) the date which is 30 days after the date such return is filed.
Those failing to follow the new information reporting requirements are subject to the failure-to-file penalty rules of Code Sec. 6724.